Locke v. Old Colony Trust Co.
| Decision Date | 21 January 1935 |
| Parties | LOCKE v. OLD COLONY TRUST CO. et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Suit by Joseph A. Locke, administrator de bonis non with the will annexed, against the Old Colony Trust Company and others. From decrees sustaining defendants' demurrer to plaintiff's petition and dismissing petition, plaintiff appeals.
Order in accordance with opinion.
Appeal from Probate Court, Suffolk County.
L Brown, J. A. Locke, J. H. Baldwin, and H. P. Moulton, all of Boston, for petitioners.
A. W Rockwood, of Boston, for respondent.
This petition in equity was brought in the probate court by the administrator de bonis non with the will annexed of the estate of Frances Taylor, late of Boston, against the executors of the will of Mary E. Taylor, also late of Boston. The petitioner prays that his claim to recover the profit realized by William Taylor from the sale by him, as one of the executors of the will of Frances Taylor, to himself as an individual of one hundred and forty-one shares of Post Publishing Company stock be established, that it be decreed that the petitioner is entitled to an equitable lien upon such assets of the estate of Mary E. Taylor now held by the respondents as executors under her will as shall be shown to represent in their converted form a part of the proceeds of such sale, that the lien be foreclosed and the respondents ordered to pay to the petitioner the amount received from such foreclosure to which he is entitled, and that the claim of the petitioner to recover from the executors the amount of the unjust enrichment of Mary E. Taylor or her estate to the extent of the profit realized by William Taylor from the sale by him of such shares of stock and given by him to said Mary E. Taylor, be established. A demurrer to the petition stating ten grounds was sustained generally and thereafter a decree entered dismissing the petition ‘ without prejudice to the right of the petitioner to commence such proceedings as may be proper, if any, following the adjudication of the account of William Taylor, formerly one of the executors of the will of Frances Taylor, rendered by the Old Colony Trust Company, Administrator with the will annexed of the Estate of William Taylor deceased.’ The petitioner appealed from the decrees sustaining the demurrer and dismissing the petition.
The allegations in the petition are substantially as follows: Frances Taylor died August 23, 1914, leaving as her only heirs at law and next of kin William Taylor and Albert M. Taylor, sons, Mary Taylor Evans, a daughter, and Paul T. Rothwell, a grandson. She made a will dated December 13, 1912, and a codicil thereto dated January 2, 1913, which were duly allowed. At the times of making her will and her codicil Frances Taylor owned two certificates of stock of the Post Publishing Company, a Massachusetts corporation, one for ninety-one shares standing in her own name and one for fifty shares standing in the name of her deceased husband. Shortly before her death she indorsed the certificate for ninety-one shares and placed it in the hands of her daughter Mary Taylor Evans, and indorsed the other certificate as administratrix of the estate of her husband and placed it in the hands of her son William Taylor. By her will and her codicil she gave the residue of her estate to her three children in equal shares, subject to certain charges for advances, and provided further that ‘ My said son William Taylor shall have the first and prior right and authority if he so desires to purchase from my said state the whole or any part of the one hundred forty-one shares of the Post Publishing Company now held and owned by me and forming a part of my estate for his sole and separate use.’ Mary Taylor Evans and William Taylor were named as executors. November 19, 1914, Frances Taylor's children signed a document which recited in substance that Mary Taylor Evans and William Taylor held the certificates of stock referred to as assets of the estate of Frances Taylor. These one hundred and forty-one shares were included in the inventory of the estate of Frances Taylor filed March 30, 1916, at the estimated value of $17,625.
On or about February 21, 1916, william Taylor purchased the one hundred and forty-one shares in question ‘ for himself and in his individual capacity’ from the estate of Frances Taylor, of which he was an executor, for $16,920. Mary Taylor Evans joined as coexecutor in the indorsement of stock certificates ‘ relying entirely upon the assertion and misrepresentation of said William Taylor that the price he was paying therefor was a fair and adequate price for the said shares of stock.’ William Taylor at the time of making such misrepresentation ‘ was an executive officer of said Post Publishing Company and well knew that said stock had a fair market value greatly in excess of the price which he proposed to pay and did pay therefor, but falsely, fraudulently, and with utter disregard for his fiduciary relationship with the said Mary Taylor Evans and the said Albert M. Taylor, grossly misrepresented and understated the fair value’ thereof. William Taylor at no time disclosed to Albert M. Taylor ‘ either the fact that he was personally purchasing said stock or the price at which he was purchasing the same, or the fact that its fair value was greatly in excess of the said price,’ and neither Albert M. Taylor nor his next of kin were ever informed of the facts herein alleged regarding the true value of the stock until the facts came to the knowledge of the petitioner after an investigation following the filing of an account by the Old Colony Trust Company as administrator with the will annexed of the estate of William Taylor on April 20, 1931. Mary Taylor Evans relied upon the misrepresentation of the value of said stock made by William Taylor and no knowledge of the facts came to her prior to her death in May, 1920, and her heirs and next of kin first learned of the facts in consequence of the investigation of the petitioner.
William Taylor, on July 7, 1925, sold the shares of stock, with other such shares, for a price for these shares of $359,550. He caused the proceeds of the sale to be invested in government bonds, receiving in addition a small amount of cash. Before his death, on December 16, 1925, William Taylor transferred to his wife, Mary E. Taylor, substantially all the bonds acquired by him ‘ or in lieu thereof either cash obtained by him from the sale of said bonds or other securities purchased with the proceeds realized from the sale of said bonds.’ Mary E. Taylor gave no consideration whatever to William Taylor for the transfer to her of the proceeds of the sale of the one hundred and forty-one shares of stock and well knew at the time she received said funds that William Taylor had purchased the stock from the estate of Frances Taylor ‘ for a price far less than its fair value and without making full disclosure to his Co-executrix’ or to said Albert M. Taylor of the information and knowledge regarding the value of said stock which he possessed. Mary E. Taylor knew, or had reason to know, that the representation made by William Taylor to Mary Taylor Evans was false and fraudulent. The final account of the Old Colony Trust Company, administrator with the will annexed of the estate of William Taylor, was allowed on August 2, 1927, showing the entire estate distributed to Mary E. Taylor.
The respondents as executors of the will of Mary E. Taylor now hold property of her estate, including the proceeds, received by her from William Taylor, ‘ originally arising out of the sale’ by him of the one hundred and forty-one shares of stock in question. Either the proceeds of the sale ‘ can be traced to and have become specific investments' now held by the respondents as executors, or ‘ during the lifetime of said Mary E. Taylor she wrongfully used and co-mingled’ such proceeds ‘ held by her upon a constructive trust for the benefit of the said Mary Taylor Evans and Albert M. Taylor or their legal representatives,’ and as a result thereof-as the petition alleges-the assets now held by the respondents as executors ‘ should be charged with an equitable lien for the benefit of’ the petitioner, or these respondents as executors should account to him ‘ for the amount of the unjust enrichment of the said Mary E. Taylor, or of her estate, to the extent of the profit realized by said William Taylor from the sale by him of the said shares of the stock of the Post Publishing Company.’
William Taylor during his lifetime filed no account of his administration as executor of the estate of Frances Taylor and no such account was filed until the appointment of the petitioner as administrator de bonis non with the will annexed of the estate of Frances Taylor on April 16, 1931, after which the Old Colony Trust Company, as administrator with the will annexed of William Taylor, filed such an account showing the sale of the shares of stock. Since the filing of said account the petitioner ‘ discovered for the first time the facts concerning the resale by said William Taylor of said one hundred forty-one (141) shares of Post Publishing Company stock on July 7, 1925.’
First. The appeals cannot be dismissed nor the final decree affirmed, as the respondents contend should be done, on the ground that the questions sought to be raised by the appeals have become moot.
This court does not decide moot questions. Blume v. William Shenkel & Sons Co., 266 Mass. 15, 164 N.E. 618. But the decree dismissing the petition was a final decree. Its effect was to decide that the petition could not be maintained without an adjudication of the account of William Taylor as one of the executors of Frances Taylor. The...
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